FNB Namibia says the country’s rental market is on a rebound after it was badly affected by the coronavirus pandemic in the last two years.
“As the impact of Covid-19 continues to cool-off, combined with the re-opening of most economies, rental growth in Namibia is yet again back on its upward trajectory, recording smaller contractions over time,” said Frans Uusiku, FNB Market Research Manager.
“The emerging recovery in overall rental growth is also evident within the one-bedroom and the three-bedroom segments, as the decline in rents continues to soften. In effect, rental growth in these segments contracted by a same magnitude of 0.4% y/y, bringing the respective 12-month average rents to N$3 646 and N$9 689.”
By the end of last year, Namibia’s 12-month average rental index growth posted a contraction of 0.7%.
Uusiku said 2021’s contraction represented a significant improvement when compared to a contraction of 2.1% recorded a year earlier.
In dollar terms, the national weighted average rent came in at N$6,728 at the end of 2021 from N$6,747 a year ago. The more than 3-bedrooms segment has consistently kept the rental growth momentum upbeat relative to other segments, with the 12-month average rent recorded at N$18 747 in December 2021. This reflects a staggering year-on-year rental growth of 9.7% and continues to reaffirm the growing relevance of the multi-family market as housing affordability issues linger,” he said.
The best performing towns in terms of rental growth according to the FNB report are Rundu (70.1% y/y), Rehoboth (19.7% y/y), and Ongwediva (3.5% y/y).
“Looking at the regions, green shoots are emerging but remain limited to a few towns. At the opposite end are Tsumeb (-45.5% y/y), Swakopmund (-28.1% y/y), Ondangwa (-26.7% y/y), (Okahandja -18.4% y/y), Walvis Bay (-16.8%) and Windhoek (-4.2% y/y). The lag could be attributed to the large concentration of financial sector workers that are more likely to continue working on a hybrid or fully remote schedule,” FNB Namibia Research Manager said.
In his outlook for the market, Uusiku said elevated inflation, interest rates and a new wave of COVID-19 cases could affect rent affordability and subsequently the pace of recovery for the sector.
“We believe stock expansion within the multi-family rental market will be a big factor in the recovery process. The year ahead will be an important test for the Namibian rental market to see whether the same factors that have driven the recovery will continue to fuel the market, if new ones would emerge, or if the frenzy of activity will finally stabilize,” he said.
